[Federal Register Volume 87, Number 112 (Friday, June 10, 2022)]
[Notices]
[Pages 35587-35590]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12403]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95041; File No. SR-NYSEAMER-2022-22]


Self-Regulatory Organizations; NYSE American LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the NYSE American Options Fee Schedule

June 3, 2022.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on May 31, 2022, NYSE American LLC (``NYSE American'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the NYSE American Options Fee 
Schedule (``Fee Schedule'') regarding credits relating to the BOLD 
Mechanism. The Exchange proposes to implement the fee change effective 
June 1, 2022. The proposed rule change is available on the Exchange's 
website at www.nyse.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this filing is to modify credits associated with the 
BOLD Mechanism, a trading mechanism for automated order handling for 
eligible orders in designated classes pursuant to NYSE American Rule 
994NY.
    Currently, BOLD Initiating Orders receive the better of a $0.12 per 
contract credit or a higher credit earned by qualifying for the 
American Customer Engagement (``ACE'') Program.\4\ As set forth in 
Section I.E. of the Fee Schedule, the ACE Program provides qualifying 
participants with per contract credits applicable to Electronic options 
transactions, including those executed via the BOLD Mechanism.
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    \4\ See Fee Schedule, Section I.M. BOLD Mechanism Fees & 
Credits.
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    The Exchange now proposes to modify Section I.M. of the Fee 
Schedule to provide that the credit available to BOLD Initiating Orders 
would be the better of $0.12 or, to the extent an ATP Holder would 
qualify for a higher credit via the ACE Program, $0.13.\5\
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    \5\ The Exchange notes that this proposed change would only 
impact the credit relating to BOLD Initiating Orders, and the ACE 
Program credits outlined in Section I.E. remain unchanged.
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    The Exchange notes that the fees and credits relating to the BOLD 
Mechanism, as originally established,\6\

[[Page 35588]]

were intended to encourage the use of the new mechanism, which purpose 
was achieved. The Exchange believes that, although the proposed change 
would set an upper limit on the credit for BOLD Initiating Orders 
offered to ATP Holders that qualify via the ACE Program, the proposed 
change would not discourage ATP Holders from continuing to use the BOLD 
Mechanism and would continue to provide an incentive to ATP Holders to 
submit orders to the Exchange for execution via the BOLD Mechanism.
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    \6\ See Securities Exchange Act Release No. 80964 (June 19, 
2017), 82 FR 28726 (June 23, 2017) (SR-NYSEMKT-2017-37) (Notice of 
Filing and Immediate Effectiveness of Proposed Change to Modify the 
NYSE Amex Options Fee Schedule).
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    The Exchange proposes to implement the fee change effective June 1, 
2022.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) and (5) of the Act,\8\ in particular, 
because it provides for the equitable allocation of reasonable dues, 
fees, and other charges among its members, issuers and other persons 
using its facilities and does not unfairly discriminate between 
customers, issuers, brokers or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposed Rule Change Is Reasonable
    The Exchange operates in a highly competitive market. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. In Regulation NMS, the Commission 
highlighted the importance of market forces in determining prices and 
SRO revenues and, also, recognized that current regulation of the 
market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \9\
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    \9\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496, 37499 (June 29, 2005) (S7-10-04) (``Reg NMS 
Adopting Release'').
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    There are currently 16 registered options exchanges competing for 
order flow. Based on publicly-available information, and excluding 
index-based options, no single exchange has more than 16% of the market 
share of executed volume of multiply-listed equity and ETF options 
trades.\10\ Therefore, currently no exchange possesses significant 
pricing power in the execution of multiply-listed equity and ETF 
options order flow. More specifically, in April 2022, the Exchange had 
less than 9% market share of executed volume of multiply-listed equity 
and ETF options trades.\11\
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    \10\ The OCC publishes options and futures volume in a variety 
of formats, including daily and monthly volume by exchange, 
available here: https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics.
    \11\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of ETF-based options, see 
id., the Exchange's market share in equity-based options decreased 
from 8.57% for the month of April 2021 to 8.14% for the month of 
April 2022.
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    The Exchange believes that the ever-shifting market share among the 
exchanges from month to month demonstrates that market participants can 
shift order flow or discontinue or reduce use of certain categories of 
products, in response to fee changes. Accordingly, competitive forces 
constrain options exchange transaction fees. Stated otherwise, changes 
to exchange transaction fees can have a direct effect on the ability of 
an exchange to compete for order flow.
    The Exchange's fees are constrained by intermarket competition, as 
OTP Holders may direct their order flow to any of the 16 options 
exchanges. The Exchange regularly reviews the effectiveness of various 
fees and incentives, including to determine whether moderations of such 
fees and incentives would be appropriate. As noted above, the existing 
fees and credits for use of the BOLD Mechanism were designed to incent 
ATP Holders to become familiar with the execution quality of the 
mechanism, and ATP Holders have now had the opportunity to do so. 
Having reviewed the effectiveness of the credit offered on BOLD 
Initiating Orders, the Exchange believes that its proposed modification 
of the incentives for use of the BOLD Mechanism is reasonably designed 
to continue to encourage ATP Holders to submit orders to the Exchange 
for execution via the BOLD Mechanism and would not discourage ATP 
Holders from continuing to use the BOLD Mechanism even though the 
credit available to ATP Holders that earn a higher credit through the 
ACE Program would be capped at $0.13, as proposed.
    The Exchange cannot predict with certainty whether or the extent to 
which ATP Holders would continue to use the BOLD Mechanism, but 
believes that the $0.12 credit on BOLD Initiating Orders (which remains 
unchanged) as well as the proposed credit of $0.13 for qualifying ACE 
Program participants would continue to encourage ATP Holders to utilize 
the mechanism. The Exchange further believes that the benefits 
associated with the use of the BOLD Mechanism would continue to provide 
an incentive for ATP Holders to direct Customer options order flow to 
the Exchange, which brings increased liquidity and order flow for the 
benefit of all market participants.
    Finally, to the extent the proposed change continues to attract 
volume and liquidity, while encouraging use of the BOLD Mechanism, the 
Exchange believes the proposed change would improve the Exchange's 
overall competitiveness and strengthen its market quality for all 
market participants by offering various mechanisms for execution of 
orders. In the backdrop of the competitive environment in which the 
Exchange operates, the proposed rule change is a reasonable attempt by 
the Exchange to maintain the depth of its market and maintain its 
market share relative to its competitors. ATP Holders have a choice of 
where they direct their order flow (including their Customer marketable 
orders), and the proposed rule change is designed to continue to incent 
ATP Holders to direct liquidity to the Exchange, thereby promoting 
market depth, price discovery and improvement and enhancing order 
execution opportunities for market participants.
The Proposed Rule Change is an Equitable Allocation of Credits and Fees
    The Exchange believes the proposed rule change is an equitable 
allocation of its fees and credits. The proposal is based on the amount 
and type of business transacted on the Exchange and ATP Holders can opt 
to use the BOLD Mechanism or not. Although the proposed change would 
limit the credit available on BOLD Initiating Orders for certain ATP 
Holders that also participate in the ACE Program, such limit would 
apply equally to all ACE Program participants that may be eligible for 
a higher credit and would thus provide for a more equitable allocation 
of credits associated with the use of the BOLD Mechanism. Moreover, the 
proposal is designed to continue to incent ATP Holders to aggregate all 
Customer interest at the Exchange as a primary execution venue and to 
attract more marketable orders to be executed through the BOLD 
Mechanism. To the extent that the proposed change does not discourage 
ATP Holders from directing Customer marketable orders to the Exchange, 
the Exchange believes that order flow sent to the Exchange for 
execution via the BOLD Mechanism would continue to make the Exchange a 
more competitive venue for, among other things, order execution of all 
order types. Thus, the Exchange believes the proposed rule change would 
improve market quality for all market participants on the Exchange and, 
as a

[[Page 35589]]

consequence, attract more order flow to the Exchange thereby improving 
market-wide quality and price discovery.
The Proposed Rule Change Is Not Unfairly Discriminatory
    The Exchange does not believe that the proposed change to the 
credit for BOLD Initiating Orders is unfairly discriminatory because 
all ATP Holders that submit orders through the BOLD Mechanism would 
continue to be eligible for the $0.12 credit, and the proposed 
modification to cap the credit available to ATP Holders that may be 
eligible for a higher credit via the ACE Program at $0.13 would apply 
equally to all such ATP Holders.
    The proposal is based on the amount and type of business transacted 
on the Exchange, and ATP Holders are not obligated to use the BOLD 
Mechanism. Rather, the proposal is designed to encourage ATP Holders to 
utilize the Exchange as a primary trading venue for Customer marketable 
orders (if they have not done so previously). To the extent that the 
proposed change would continue to encourage ATP Holders to maintain 
their current level of Customer interest, including marketable 
interest, on the Exchange, this order flow would continue to make the 
Exchange a competitive venue for, among other things, order execution. 
Thus, the Exchange believes the proposed rule change would support 
market quality for all market participants on the Exchange and, as a 
consequence, attract order flow to the Exchange thereby improving 
market-wide quality and price discovery. The resulting continued volume 
and liquidity would provide more trading opportunities and tighter 
spreads to all market participants and thus would promote just and 
equitable principles of trade, remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act, the Exchange does 
not believe that the proposed rule change would impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. Instead, as discussed above, the Exchange believes 
that the proposed changes would continue to encourage the submission of 
additional liquidity to a public exchange, thereby promoting market 
depth, price discovery and transparency and enhancing order execution 
opportunities for all market participants. As a result, the Exchange 
believes that the proposed change furthers the Commission's goal in 
adopting Regulation NMS of fostering integrated competition among 
orders, which promotes ``more efficient pricing of individual stocks 
for all types of orders, large and small.'' \12\
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    \12\ See Reg NMS Adopting Release, supra note 9, at 37499.
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    Intramarket Competition. The proposed change is designed to 
maintain order flow (particularly Customer marketable orders) to the 
Exchange. The Exchange believes that the proposed modification to the 
credit on BOLD Initiating Orders would not discourage ATP Holders from 
using the BOLD Mechanism or maintaining their current level of Customer 
marketable order flow to the Exchange and, to the extent such purpose 
is achieved, the Exchange would maintain its Customer order flow, which 
benefits all market participants on the Exchange. In addition, because 
the credits available on BOLD Initiating Orders, as modified, would be 
available to all similarly-situated market participants that execute 
Customer marketable interest through the BOLD Mechanism, the Exchange 
does not believe that the proposed change would impose a disparate 
burden on competition among market participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which market participants can readily favor one 
of the 16 competing option exchanges if they deem fee levels at a 
particular venue to be excessive. In such an environment, the Exchange 
must continually adjust its fees to remain competitive with other 
exchanges and to attract order flow to the Exchange. Based on publicly-
available information, and excluding index-based options, no single 
exchange has more than 16% of the market share of executed volume of 
multiply-listed equity and ETF options trades.\13\ Therefore, currently 
no exchange possesses significant pricing power in the execution of 
multiply-listed equity & ETF options order flow. More specifically, in 
April 2022, the Exchange had less than 9% market share of executed 
volume of multiply-listed equity & ETF options trades.\14\
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    \13\ See note 10, supra.
    \14\ Based on a compilation of OCC data for monthly volume of 
equity-based options and monthly volume of ETF-based options, see 
id., the Exchange's market share in equity-based options decreased 
from 8.57% for the month of April 2021 to 8.14% for the month of 
April 2022.
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    The Exchange believes that the proposed rule change reflects this 
competitive environment because, although it may reduce the credit that 
some ATP Holders would earn on BOLD Initiating Orders, it modifies the 
Exchange's fees in a manner designed to continue to incent ATP Holders 
to direct trading interest (particularly Customer marketable interest) 
to the Exchange, to provide liquidity and to attract order flow. To the 
extent that this purpose is achieved, all the Exchange's market 
participants should benefit from the improved market quality and 
increased opportunities for price improvement.
    The Exchange believes that the proposed change could maintain 
competition between the Exchange and other execution venues, including 
those that currently offer similar Customer execution mechanisms, by 
encouraging additional orders to be sent to the Exchange for execution.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \15\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \16\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \17\ of the Act to determine whether the proposed 
rule

[[Page 35590]]

change should be approved or disapproved.
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    \17\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEAMER-2022-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEAMER-2022-22. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEAMER-2022-22, and should be 
submitted on or before July 1, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-12403 Filed 6-9-22; 8:45 am]
BILLING CODE 8011-01-P


